Key issues

2.1        This chapter examines the evidence, both for and against the bill, received by the committee in submissions to this inquiry.

2.2        Arguments presented in support of the bill emphasised the environmental and conservation values of the Great Australian Bight (the Bight), and the potential impact of an oil spill on both marine ecosystems and local industries.

2.3        Submitters who raised concern with the bill, highlighted the economic benefits of oil and gas exploration and production, and the need to ensure Australia's energy security in the medium and long term. Submitters also pointed to the strengths of Australia's offshore oil and gas regulatory regime, and the strengths of Australia's environmental protection laws.

Arguments in favour of the bill

2.4        Much of the evidence received from submitters in favour of the bill is being examined by the Senate Environment and Communications References Committee for its inquiry into oil or gas production in the Great Australian Bight. This includes the environmental and conservation values of the Bight, industries which rely on the marine environment, and the impact of oil spills on both the environment including marine fauna. The committee acknowledges the work being undertaken by the Senate Environment and Communications References Committee on these issues, and notes the concerns raised by submitters. This section will briefly outline the evidence received.

2.5        The Wilderness Society submitted that the Bight's 'extraordinary environmental values' are threatened by current oil and gas exploration proposals from a range of companies that hold exploration permits in the region. It stated that it strongly supports the objectives of the bill, and that 'the case is now clear that the Great Australian Bight is not a safe or appropriate place for new oil and gas exploration and industrialisation'. It also recommended that:

...existing petroleum exploration permits in the Great Australian Bight should be immediately suspended, consistent with the Bill's objective, during the Parliament's deliberations to develop new laws to permanently protect the environment of the Great Australian Bight from mining activities.[1]

2.6        Greenpeace Australia Pacific similarly stated that 'the damage to the environment of the Great Australian Bight posed by mining activities, in particular by oil and gas exploration and production, is an unacceptable risk'.[2] It also recommended 'that all existing permits should be immediately rescinded and that the National Offshore Petroleum Titles Administrator should place a hold on awarding any new permits'.[3]

2.7        The Humane Society International provided an overview of the environmental and conservation values of the Bight, including the number of threatened and endangered species which can found in the region.[4] It stated that it 'strongly approves' of the bill and the protection it would afford marine fauna from the effects of mining activities.[5]

Current regulatory regime

2.8        Submitters argued that the current regulatory regime governing offshore oil and gas activities is inadequate to protect the Bight.

2.9        The Wilderness Society stated that it has 'serious concerns' regarding the adequacy of the environmental protections offered under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act). It also stated that it has serious concerns regarding the National Offshore Petroleum Safety and Environmental Management Authority's (NOPSEMA) assessment and approval powers under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act).[6]

2.10      The Wilderness Society also raised concern that the current zoning and designation of marine reserves is inadequate to protect the Bight. It stated that the regulatory framework 'only considers the appropriateness (or otherwise) of activities proposed within a reserve's boundaries' however 'the risks and impacts associated with offshore oil exploration and development are not confined to its particular location'.[7]

Arguments against the bill

2.11      Like much of the evidence received in favour of the bill, many of the issues raised by submitters who did not support the bill are being examined by the Senate Environment and Communications References Committee's inquiry into oil or gas production in the Bight. These issues include the strength of the existing regulatory regime, the economic benefits of oil and gas exploration and production, and the need to ensure Australia's energy security in the medium and long term.

2.12      Some submitters such as Chevron, Santos and Murphy Australia Oil, expressed their opposition to the bill and by way of explanation referred the committee to information contained in their submissions to the References Committee inquiry. This information included statements on the strength of the current regulatory regime, and the work undertaken by oil and gas proponents to ensure that the environment is protected from damage.[8]

2.13      The discussion below will briefly outline the evidence received from submitters who opposed the bill.

Impact on state economies

2.14      Submitters argued that the bill would have a negative impact on the economies of South Australia and Western Australia. For example, the Western Australian Department of Mines and Petroleum noted that though state jurisdictions only extend to the outer limit of coastal waters, oil and gas activities in adjoining Commonwealth waters can provide benefits to states. These include benefits from 'land based petroleum processing and reticulation of energy, provision of support, facilities (e.g. ports) and associated employment opportunities'.[9]

2.15      The South Australian Government also highlighted that the potential for large-scale petroleum accumulations in the Bight has attracted interest from major oil and gas companies.[10] It submitted that 'significant economic benefits (in the form of multiplier effects, indirect and direct investment) will flow into South Australia if exploration is successful and petroleum resources are developed'. It also noted that though these opportunities may be minor during exploratory stages, there is the potential for these to increase if petroleum production occurs.[11]

2.16      The Western Australian Department of Mines and Petroleum outlined the opportunities which have arisen from the production of natural gas, oil and condensate in the Commonwealth and state waters of the North West Shelf region. This included:

...exploration drilling activities, production platforms and sea bed facilities, pipelines to transfer petroleum to onshore processing plants and support bases located along Western Australia's Pilbara coastline. Apart from these activities providing significant returns to the national economy, they also attract skilled and unskilled employment to the region, provide direct and indirect support of related commercial activities and contribute to the enhancement of social amenities.[12]

2.17      Both the South Australian Government and the Western Australian Department of Mines and Petroleum stated that 'it is important that these opportunities are not unnecessarily restricted'. [13]

2.18      The Department of Industry, Innovation and Science noted that exploration in the Bight has been underway for several years with expenditure by permit holders of more than $200 million since 2011. It stated that:

Should the legislation pass, companies will realise no benefit from these sunk costs and in some cases may incur significant further costs relating to cancelled contracts and unrealised income for services companies. This will likely result in loss of local jobs for Australian workers at supply bases and through loss of logistical and contract opportunities.[14]

2.19      The South Australian Government stated that if enacted, the bill 'has the potential to reduce the global investment attractiveness of Australia and indeed South Australia' by introducing risk for major offshore petroleum investments. It further noted that this risk may extend to onshore Australia, and South Australia in particular, if there is a perception of 'being closed for business'.[15]

Regulatory certainty and investment attractiveness

2.20      Submitters expressed concern that the bill would reduce Australia's attractiveness as an investment destination. For example, the South Australian Government stated that international rating agencies have consistently rated Australia highly as an investment destination based on the mining industries' perceptions of certainty, timeliness, and efficiency of assessment, approval and compliance processes. It concluded that 'it is important that Australia and South Australia maintain its investment attractiveness to ensure we continue to compete with other global investment destinations'.[16]

2.21      Similarly, the Department of Industry, Innovation and Science submitted that:

Australia promotes itself as having a stable regulatory regime, providing an attractive policy and legal framework for oil and gas exploration and development, conducive to investment by companies of all sizes, security of title with the right to retain and/or develop a discovery, subject to meeting the specified terms of a retention lease or a production licence, and transparent and practical regulatory requirements covering all stages of petroleum operations.[17]

2.22      Like the South Australian Government, the Department of Industry, Innovation and Science submitted that there is a fundamental need to ensure regulatory certainty if Australia is to remain appealing as an investment destination. It stated that 'a perceived lack of certainty could result in reduced exploration investment'.[18] It also noted that this lack of certainty 'could also impact major LNG projects in other parts of Australia, including the North West Shelf (Gorgon, Pluto, Wheatstone and Browse)'.[19]

Energy security

2.23      Submitters presented evidence that the bill would have a negative effect on Australia's ability to ensure its energy security. For example, Geoscience Australia stated that it 'believes the Bill would adversely affect Australia's economy and energy security in the medium and longer term'.[20]

2.24      The Western Australian Department of Mines and Petroleum submitted that the bill:

...effectively threatens Australia's future energy security, diversity of energy sources and the cost of energy supply to the commercial and domestic markets. It is important that energy security and the diversity of energy sources are maintained.[21]

2.25      It noted that oil and gas projects in the North West Shelf and the Pilbara had provided certainty in energy supply and had enhanced energy security for Western Australia. The Western Australian Department of Mines and Petroleum also stated that 'it is considered developments in the Great Australian Bight will provide similar benefits to the national and State economies'.[22]

2.26      Geoscience Australia noted that the Bight basin is promoted as one of the few remaining frontiers[23] with the potential for largescale commercial exploration and production. It noted that:

Some of the remotest areas of Australia's maritime jurisdiction present the greatest opportunities for discovering Australia's next major energy province. A recent national appraisal by Geoscience Australia of the hydrocarbon potential of Australia's offshore frontier basins ranked the Ceduna sub-basin of the Bight Basin as the nation's most prospective area for oil and gas.[24]

2.27      According to Geoscience Australia, not only is the Ceduna Sub-basin one of the largest under-explored basins in Australia, it is considered by the petroleum industry to be one of the largest in the world.[25]

2.28      Geoscience Australia submitted that Australia's future economic prosperity is underpinned by maintaining a steady stream of new energy projects. It stated that:

Whilst Australia's gas resources are extensive, domestic supplies of oil are limited and production continues to decline. It is expected that the trend of decreasing oil resources will not change within the known oil basins, making the discovery of a new oil province or provinces essential to maintaining Australia's future energy security.[26]

Strength of the existing regulatory regime

2.29      Submitters highlighted the strengths of the regulatory regime for offshore oil and gas activities and argued that there is no need for bill as this regime provides sufficiently robust environmental protection.

2.30      Both the Department of Industry, Innovation and Science, and the South Australian Government outlined the existing regulatory regime which governs offshore oil and gas exploration and production. Both submitters also outlined the environmental approvals process undertaken by NOPSEMA and the requirements of the OPGGS Act and the EPBC Act.[27]

2.31      The South Australian Government stated that:

It is the view of the South Australian Government that robust environmental safeguards currently exist under the OPGGS Act and the EPBC Act for marine parks and other environments to ensure assessment and regulation of mining activities occurs to protect the environment, conservation and biodiversity values in the GAB.[28]

2.32      BP Australia submitted that under the requirements of the current regulatory regime, the specific attributes of the Bight are 'automatically hardwired into any regulatory assessment'. In particular:

The environmental attributes of the GAB, including the values of the Commonwealth Marine Reserves therein, must be detailed by any company seeking to conduct petroleum activities there, and the risks to the environment posed by that particular activity must be shown to be ALARP [As Low As Reasonably Practicable] and acceptable before they can be accepted by NOPSEMA.[29]

2.33      The South Australian Government concluded that 'it has confidence in the expertise and objective-based focus of NOPSEMA in regulating the offshore exploration industry, and believes NOPSEMA is the appropriate body to do so'.[30]

2.34      Similarly, the Western Australian Department of Mines and Petroleum submitted that as a state regulator with responsibility for environmental protection and safety in exploration, development and petroleum pipeline infrastructure projects, it has worked in direct liaison with NOPSEMA. It submitted that this cooperation has:

...enabled complementary robust assessment of project proposals, and stringent compliance with the legislative and regulatory obligations and approval conditions. The effectiveness of these processes has contributed to Western Australia continually being rated internationally as one of the most attractive investment destinations by the resources sector.[31]

Marine reserves

2.35      Submitters argued that the bill is unnecessary due to 'the environmental protection provisions under Commonwealth and State legislation and regulatory practices, and also through industry codes of environmental practice'.[32]

2.36      The Western Australian Department of Mines and Petroleum noted that only some of the five proposed Australian Marine Parks in the Bight prevent access for mining activities, and access in other proposed zones is subject to approval. It stated that the proposed zonings were subject to public consultation conducted by the Commonwealth Bioregional Advisory Panel. The Department further stated that:

By contrast, the Bill to prevent these activities within the entire Great Australian Bight does not appear to have been developed using a wide public and stakeholder consultation process.[33]

2.37      The Department of the Environment and Energy noted that in September 2016, the Government released the reports of the independent Commonwealth Marine Reserves Review and that it has commenced the statutory process to prepare new management plans for five Commonwealth Marine Reserves Networks. This includes the South-west Commonwealth Marine Reserves Network which incorporates the Great Australian Bight Commonwealth Marine Reserve. As part of the plan development process, there are two phases of public consultation, the first of which concluded in October 2016, and the second of which is due to commence in the second quarter of 2017. The Department stated that this consultation provides an opportunity for 'all interested parties to have a say on how Commonwealth marine reserves are managed'.[34]

2.38      BP Australia submitted that marine reserves are already protected under the existing regulatory regime. It stated that oil and gas proponents are required to detail all of the environmental attributes of an area, including Commonwealth Marine Reserves, and demonstrate that the risk has been managed appropriated.[35]

2.39      BP Australia argued that the bill is predicated on an assumption that notwithstanding the risk management processes required of offshore oil and gas proponents, all activity should be banned in the Bight due to the presence of a Commonwealth Marine Reserve in the area.[36]

2.40      BP Australia noted that Australia's system of Commonwealth Marine Reserves establishes tiered zones of protection appropriate to the nature of the environmental values found in each area. Under this system of zoning, oil and gas activity is permitted in Multiple Use Zones. BP Australia submitted that 'the Bill appears to propose that there is no point to the intermediate level of protection afforded under the Multiple Use Zone of the Marine Reserves Network'. Further, it submitted that the bill:

...would seriously undermine the basis for these zones and risk degrading the quality of environmental protection in the Commonwealth Marine Area. It would also mark a departure from the globally recognised principles of IUCN classification.[37]

Concern with clauses of the bill

2.41      Submitters raised a number of concerns in relation to the operation of the bill's clauses, and drafting uncertainties. These are outlined below.

Scientific research

2.42      As noted in Chapter 1, the bill would prohibit any research or investigation in the Bight if it was not relevant to the conservation or protection of the Great Australian Bight marine area. This would result in the cessation of research being conducted in the Bight such as the dredging rocks and seismic surveying. This prohibition would include research conducted by Geoscience Australia which submitted that it engages in precompetitive data acquisition and regional geological studies to technically de-risk exploration opportunities.[38]

2.43      Geoscience Australia also drew the committee's attention to the work of the International Ocean Discovery Program vessel JOIDES Resolution which is expected to drill at a site in the western Ceduna Sub-basin in late 2017. Geoscience Australia explained that this drilling will be 570 metres deep and is intended to obtain a continuous core which will be made available to international scientific researchers. It stated that rocks had been found in the area exhibit characteristics of having been 'deposited during a period of major climatic, environmental and oceanic change called "Oceanic Anoxic Event 2"'.[39] Geoscience Australia explained that:

This event represents one of the largest carbon cycle perturbations in Earth history, with widespread organic-matter burial in oxygen depleted environments (preserved as black shales).[40]

2.44      Geoscience Australia stated that 'if the proposed Bill is successful, such internationally significant scientific studies will be prohibited, diminishing Australia's international scientific reputation'.[41]

Compensation

2.45      Submitters raised concern with the proposed clause of the bill which would provide for reasonable compensation to be awarded for the acquisition of property. For example, BP Australia submitted that:

...previously the High Court has judged (Cmwth vs WMC Resources 1998) that exploration permits in that case would not be captured under the definition of acquisition of property and entitling compensation. Clause 7 of the Bill as written cannot therefore be relied upon by Senators to give effect to the need for compensation.[42]

Drafting uncertainties

2.46      The Law Council of Australia raised a number of issues with the drafting of the bill. These are as follows:

• It is not clear which Minister or Department would be responsible for overseeing the operation of legislation. In particular, it is not clear who would have responsibility for investigation and enforcement in the event of a breach. Further, the bill provides no powers to any enforcement agency or body to assist with investigations.
• The definition of the 'Great Australian Bight Marine Area' is not sufficiently specific and might be better defined with the use of longitudinal and latitudinal references.
• The definition of mining operation under the EPBC Act differs to the definition provided in the bill.
• The object of the bill specifically mentions the protection of the fishing industry but it is unclear what the intention behind this is as it is not mentioned in any other clause. The Law Council of Australia questioned whether there is an intention to give the fishing industry special standing, but also questioned the purpose of such a decision.
• Apart from a criminal penalty, the bill does not provide any other option for legal action including civil enforcement options and the ability to seek remediation or compensation from the offender. The Law Council of Australia suggested that the provisions of the EPBC Act provide a 'much better set of remedial measures'.
• The Law Council of Australia questioned the adequacy of the penalties included in the bill noting that 1,000 penalty units is the equivalent of $180,000. It suggested that a higher maximum penalty, and scale of penalties reflective of the harm and damage might be more appropriate.[43]

2.47      The Law Council of Australia concluded that though it 'can see that there is some merit in seeking to protect the waters of the Great Australian Bight', 'it is of the opinion that the Bill as presented in its current form has a number of deficiencies and uncertain elements'.[44]

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